According to CNET, Eastern Europe and China may be competing with India for American offshoring services because of rising pay rates – double-digit salary growth was reported in 2003, while US pay has been the same or even declining.
The same article reports that in a survey conducted by DiamondCluster International, a Chicago consulting firm, efficiency gains from offshoring are currently ranging only 10-20 percent as opposed to early expectations as high as 50 percent.
Here’s the math:
10% of 300,000 tech jobs at an average of $50,000 each comes to a savings of $1.5 billion.
Using H-P CEO Carly Fiorina’s 2003 cash compensation of $2.25 mil as an example, that’s equivalent to the salary and bonuses of 666 CEOs. Is there a message in that number?
Here’s what I think is the message: American companies could achieve the same level of savings with a lot less disruption to their operations if they outsourced their CEOs to Japan or Europe, where salaries are in the half million dollar range.
If only half of the Fortune 500 stepped up to the plate and outsourced their their CFO’s and COO’s as well, the net gain would be in the same $1.5 billion range, with none of the downsides of shipping operations overseas.
Funny thing how the layoff buck always tumbles so low on the corporate food chain.